HMO mortgages are only available to experienced landlords. This means that lenders may not accept applications from those who have been landlords for more than two years and/or have experience with HMO letting. There may be additional requirements from lenders. Lenders may have additional requirements if you are a first landlord.
Lenders may accept evidence to support an HMO licence application in lieu of the actual license. However, this is more time-consuming and not always feasible. On the condition that you have the license, you might be deemed 'fit to run an HMO'. But, if possible, the underwriting process will be facilitated if the license is readily available.
It is not a good idea to approach lenders for the purpose of getting a mortgage. You won't be able to fully understand each lender's requirements. Specialists can help you find the right lender and get you the best rates. To get started, you can either make an inquiry or ask our experts questions about your mortgage.
Why invest in HMOs HMOs (Houses in Multiple Occupation) are often more profitable than standard rental properties. But, what exactly is this and how easy can you finance them. A House of Multiple Occupation (HMO), is a property that has three or more occupants sharing a bathroom or kitchen facility. They are also unrelated. Properties require an HMO licence from the local authority in order to meet regulatory standards. This is often called a house-share. It's a popular option for young professionals and students, as rent is generally more affordable than a small studio or flat. A HMO can also be a benefit to landlords and property investors, since multiple bedsits often yield higher rental returns than a stand-alone purchase to let.
Lenders will accept evidence of an HMO application as evidence, even if the actual licence is not available. This can be more time-consuming and less practical. In this case, the HMO licence may be required to determine if you are 'fit and proper' for the job. If possible, having the licence on hand will help you with the application stage.
HMOs often have higher running costs and are more difficult to manage. HMOs will require locks for each room, and there are more detailed safety and health guidelines than regular buy to rent. The setup costs of an HMO are more costly than regular buy to rent.
Because nobody wants to clean up the mess of another, shared areas often 'get left'. The property may need to be maintained by the landlord, who might have to clean it or hire cleaners.